Homeowners released a record amount of equity in 2022

Equity release is a way of accessing some of the value of your home without having to move.

Designed for homeowners who are aged 55 and over, it allows you to take the money that you release as a single lump sum or in several smaller payments, or a combination of both.

And new figures show that it's becoming increasingly popular.

Homeowners accessed a record £6.2bn of their property wealth via equity release last year, amid the cost of living crisis.

This is up 29% from £4.8bn in 2021 and double the £3.06bn recorded in 2017, according to the Equity Release Council.

A record 93,421 new and returning customers went for equity release in 2022, with nearly 50,000 homeowners taking out new plans, a 20% increase on 2021.

"In a climate where retirement incomes have to stretch further for longer, property wealth is as important to many people's financial wellbeing as their pension," said David Burrowes, chairman of the Equity Release Council.

"The unmet needs of the UK's ageing population have seen the equity release market double in size since 2017, channelling decades of experience in helping older homeowners to gain financial freedom.

"Today's equity release customers are more in control of their costs than ever before, with the right to make voluntary penalty-free partial repayments and the option of fixed early repayment charges which reduce to 0% over time."

Since 28 March 2022, all new plans have guaranteed customers the right to make voluntary penalty-free partial repayments to reduce interest costs.

£624bn potential

Across England, Scotland and Wales, the total amount of housing equity available to homeowners aged over 55 in the fourth quarter stood at £624bn, according to an analysis by Canada Life.

This is a decrease of nearly £200bn since the second quarter of 2022.

"The significant change in the amount of equity available to release can in part be attributed to the challenging market conditions and slowing of the UK housing market, while some lenders have also reduced the loan-to-values available," explained Alice Watson, head of marketing communications at Canada Life.

Q4 dip

While 2022 as a whole was a record-breaking year for equity release, activity dipped in the final quarter of the year after September's 'mini-Budget' prompted interest rate rises, reduced product availability and shook consumer confidence.

Customers borrowed £1.36bn of property wealth between October and December 2022, marginally higher than £1.34bn in the same period a year earlier but down 20% from £1.71bn between July and September -- bucking the usual trend whereby Q4 is the busiest quarter of the year.

"Seeking informed financial advice and independent legal advice from firms who sign up to Council standards is essential at the best of times, and more so now than ever," Burrowes added.

"While some consumers may delay a decision about unlocking property wealth in 2023, many people will find that releasing equity is an appealing and essential step to move ahead with their lives and support their families' needs."